Salary threshold for new Employment Pass applicants to be raised to $5,600 from 2025

A raft of changes to the foreign work pass system is set to keep up the skills bar of Singapore’s foreign workforce at all levels, while ensuring Singaporeans can get good jobs and enterprises here pursue innovation.

Chief among these changes is an increase in the Employment Pass (EP) qualifying monthly salary for new applicants from 1 January 2025, and for those who are renewing it from the year after.

Their minimum qualifying monthly salary will be raised to S$5,600, from S$5,000 currently.

Those working in financial services will need to earn S$6,200 a month, up from S$5,500 now, in view of the sector’s higher wage norms.

“The EP qualifying salary will also continue to increase progressively with age,” Minister for Manpower Tan See Leng said on March 4, during the debate on the Ministry of Manpower’s (MOM) budget.

The minimum salary for candidates in their mid-40s to qualify will also increase to up to S$10,700, and to up to S$11,800 for those working in financial services.

The changes were made to ensure the cost of hiring an EP holder remains in line with what the top one-third of local professionals, managers, executives, and technicians minimally earn, which was a benchmark unveiled during Budget 2022.
 

The EP qualifying salary is reviewed annually against the benchmark, MOM said in a statement on March 4.

The timing of the moves means that firms with existing EP holders have a longer runway, potentially up to 2028, to manage the impact of these changes and prepare their hiring plans, Dr Tan added.

The EP is valid for up to two years for first-time pass holders, and up to three years for those whose passes are renewed.

Dr Tan said the dates were set in response to concerns from trade associations and chambers on the rising costs of manpower and constraints in hiring.

However, he added: “Even as we continue to attract top talent to grow our economy, our work pass framework needs to be strengthened to ensure that firms develop their local workforce and treat locals fairly.”

Still, there will be no adjustment to the S Pass qualifying salary and levy in 2024, which will both be increased in 2025 as part of a series of stepped increases already announced in Budget 2022, he noted.
 

Dr Tan also announced changes to the work permit framework for the marine shipyard sector set to kick in from 1 January 2026, to spur the sector’s pivot to more productive and resource-efficient activities.

The Dependency Ratio Ceiling (DRC) for the sector will be gradually reduced from 77.8 per cent to 75 per cent.

The DRC is the maximum permissible ratio of foreign workers to the total workforce for a company in a given sector.

The change means that companies in the sector can hire a maximum of three work permit holders for each local employee, down from 3.5 currently.

The levy for basic-skilled work permit holders in the sector will be increased from S$400 to S$500, and that for higher-skilled work permit holders from S$300 to S$350.
 

Dr Tan spoke on the effectiveness of the Complementarity Assessment (COMPASS) framework as well.

COMPASS is a points-based framework that evaluates attributes of individual EP applicants and their prospective employer, in deciding to issue the pass.

All new EP applications made since 1 September 2023, have been evaluated through COMPASS, and the framework will be extended to renewals from 1 September 2024.

Under COMPASS, four “foundational” criteria are used to assess an application. They are an individual’s salary and qualifications, as well as the firm’s workforce diversity and support for local employment.

Bonus points are given to jobs where there is a lack of skilled workers specified on a Shortage Occupation List, and firms that partner the Government on ambitious innovation and internationalisation activities.

To pass the evaluation, which is designed to provide firms with greater clarity and certainty for manpower planning, the application needs to rack up 40 points.

Responding to labour MPs Patrick Tay (Pioneer) and Desmond Choo (Tampines GRC), Dr Tan said the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) has been engaging and supporting companies that score poorly on firm-related attributes under COMPASS, to help them improve their workforce profile and adjust to the framework.

He said more than 440 firms have attended TAFEP’s workshops over the past year.

Firms with unfair hiring practices will still be taken to task under the Tripartite Guidelines on Fair Employment Practices, and under upcoming workplace fairness legislation in future, he added.

Dr Tan also responded to questions from Leader of the Opposition Pritam Singh and Mr Choo on the effectiveness of the Shortage Occupation List in easing skills shortages.

He noted that the list was designed to award bonus points on COMPASS to EP applicants filling acute occupational shortages in areas of strategic importance for the economy.

Roles on the list include artificial intelligence engineer, carbon trader, and alternative protein food application scientist, among others.

The proportion of EP holders in shortage occupations has increased since COMPASS was implemented, which Dr Tan said shows the list reflects real shortages industries face.

He added that based on preliminary data since COMPASS’ implementation in September 2023, 20 per cent of new EP holders working in roles on the list used the bonus points to pass COMPASS.

“Therefore, the Shortage Occupation List is very helpful in ensuring that COMPASS does not hinder business growth because of a shortage of skills locally.”

However, he added that some occupations continue to have small numbers of EP holders, such as those in the green economy and agri-tech, which are very nascent fields globally.

“While we partner agencies in recruiting them here, we are also contemporaneously investing in developing our local talents for these jobs.”

Dr Tan also provided an update on the Overseas Networks and Expertise (ONE) Pass, launched in January 2023 to draw top talent to Singapore.

Almost 4,200 ONE Pass applications had been approved as at 1 January 2024, he said. He added: “In an era where talent is scarce, businesses follow talent.”
 

While not large in numbers, he said, ONE Pass holders generate employment either through their own ventures or through anchoring businesses in Singapore, creating good jobs for Singaporeans.

He cited Mr Phil Inagaki, the managing director of Xora Innovation, an early-stage, deep tech investment platform of Temasek, as an example.

Mr Inagaki raised US$120 million (S$161 million) in funding across five startups in industries such as artificial intelligence, semiconductors, and clean energy, before assuming his current role, Dr Tan said.

“He helps our local startups translate scientific breakthroughs into commercial successes.”
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.